Press Release|Public Finance
KBRA Assigns A Rating to NJTTFA Transportation Program Bonds, 2023 Series BB; Affirms A+ Rating for New Jersey GO; Outlook is Stable
6 Nov 2023 | New York
KBRA assigns a long-term rating of A with a Stable Outlook to the New Jersey Transportation Trust Fund Authority (NJTTFA) Transportation Program Bonds, 2023 Series BB.
KBRA additionally affirms the long-term rating of A+ with a Stable Outlook for the State of New Jersey's General Obligation Bonds.
Lastly, KBRA affirms the long-term rating of A with a Stable Outlook for the following bonds:
New Jersey Transportation Trust Fund Authority
- Transportation Program Bonds
- Transportation Program Notes (Fixed Rate)
New Jersey Economic Development Authority (NJEDA)
- Lease Revenue Bonds
New Jersey Education Facilities Authority (NJEFA)
- Revenue Bonds, Higher Education Capital Improvement Fund Issues
Key Credit Considerations
The rating actions reflect the following key credit considerations:
Credit Positives
- State economic base is large and diverse. Per capita personal income is the fourth highest in the nation.
- Governor has broad executive powers under the New Jersey Constitution to adjust the budget and reduce spending to maintain budget balance.
Credit Challenges
- The ability to achieve balanced operations and satisfactory reserves will be challenged by the loss of one-time federal revenues available to bolster finances through the pandemic.
- Unfunded pension and OPEB liabilities are very high relative to personal income and gross state product.
- Expiration of a 2.5% surcharge on corporate business tax at the end of CY 2023 is expected to reduce revenues by $333 million in FY 2024 and nearly a billion each year thereafter when fully phased out and could challenge structural budgetary balance.
Rating Sensitivities
For Upgrade
- Track record of consistently balanced operations that do not rely upon non-recurring revenues, provide full actuarially determined pension contributions, and support maintenance of substantial operating reserves.
- Economic growth patterns that meet or exceed regional and national trends.
For Downgrade
- A resumption of the pattern of underfunding full actuarial pension contributions.
- A significant diminution of reserves to balance financial operations to a level no longer consistent with the rating level.
- Deteriorating economic conditions.
To access rating and relevant documents, click here.